Banco Macro S.A. (BMA) Earnings Call Transcript & Summary

Good morning, and welcome to Banco Macro's Second Quarter 2020 Earnings Conference Call. Thank you all for joining us today. Second quarter earnings release was distributed yesterday and is available on our Investor Relations website. For this quarter's call, we are also introducing an earnings call presentation, which we like to accommodate today's remark. The presentation will be available on our website following the call. Please note that this call may include forward-looking statements, and please refer to our SEC filings to provide our information. All figures discussed today are in Argentine pesos and have been restated in terms of the measuring unit occurring at the end of the reporting period in accordance with IFRS [indiscernible]. With that, let me introduce today's speakers. So we have with us today, Juan Parma, Chief Executive Officer of Banco Macro; Jorge Scarinci, Chief Financial Officer of Banco Macro; and myself, Nicolas Torres, Investor Relations from Banco Macro. I will now briefly comment on the second quarter 2026 macroeconomic context before moving on to the best second quarter 2026 financial performance. Economic activity moderated after the first quarter with [indiscernible] May economic activity averaging 0.8% below the first quarter of 2026. Our contract [indiscernible] offset witness in manufacturing and commerce. Inflation declined throughout the quarter from 2.6% in April to 1.9% in June. When rates tomorrow decline from 26.3% at the end of March to 22.7% at the end of June. The exchange -- exchange rate depreciated [ 7.3% ] during the quarter, remaining stable throughout April and May before weakening in June. On credit, growth remains mute. Finally, system asset quality remain under pressure. System NPLs decreased from [ 7% ] in March to 7.7% in May, which is the latest available date, with household delinquency at 12.8% versus 3.5% for corporates, while coverage declined from 90.1% to 86.3%. Turning to our main dealers. Starting on the left, second quarter net income totaled ARS 206.8 billion, increasing 39% quarter-on-quarter and 12% year-on-year. The improvement was mainly driven by higher results from financial instruments at fair value P&L and lower loan loss provisions and as foreign invest from the net monetary position. Net operating income before administered expenses reached ARS 1.29 trillion, down 2% quarter-on-quarter and up 1% year-on-year. Operating income after administrative expenses was ARS 603.8 billion, down 1% quarter-on-quarter and up 1% year-on-year. Moving to the left-hand side, adjusted net income reached ARS 221 billion [indiscernible] and adjusted annualized ROE of 14.3%. This excludes ARS 14.2 billion in after tax restructuring expenses in line with restructuring impact that we saw in the first quarter. On efficiency, our exchange ratio was 33.9% stable year-on-year as we continue to execute on the bank's efficiency transformation. Finally, our reported NPL ratio was 6.25% as JUne 2026. This remained below 7.7% report as of May 2026. When our coverage ratio stood at 95.4% above of the market's 86.3% of May. Before moving on to the detailed financial performance, let's review the main highlights of the quarter. First, group registered double-digit net income growth with net income up 39% quarter-on-quarter to ARS 206.8 billion. This represent an annual ROE of 13.4%, while adjusted ROE is still at 14.3%, up 4.4 percentage points from the last quarter. Second, margins remain stable. Net interest income remained stable while deposits continue to represent 76% of liabilities as the average cost of interest-bearing net earnings below 20%. Further, we continue executing on efficiency, including another 18 branch closure during the quarter. The after-tax retirement charge remained unchanged quarter-over-quarter at ARS 14 billion. Fourth, asset quarter continued to outperform the system with NPS at 6.25%, below 7.7% and moreover coverage stood at 95.4% above 86.3%. Fifth, lending growth remained challenging. Total rent increased 3% quarter-on-quarter, supported by commercial growth, while [indiscernible] basis total financing decreased 5%. Our private sector market share remained stable at 8.2%. And sixth, our balance sheet remain strong with a Tier 1 ratio of 28% and ample liquidity, both pursuing growth and strategic opportunities. Now let's turn to the quarter-over-quarter PIL variations breakdown. Net income increased ARS 57 billion quarter-on-quarter due to higher income from growing securities for profit or loss, lower loan loss provisions and lower less from the network acquisition. Net interest income increased 1% of ARS 7.4 billion quarter-on-quarter as lower funding costs mostly offset lower loan yields and our key lending volumes. Income on securities decreased 18% to [ ARS 30.5 billion ] quarter-on-quarter. And in the first quarter of 2026, [ ARS 71 billion ] one-off result from the sale of [indiscernible] was recorded. Net income decreased 2% to ARS 4.6 billion in the quarter as high mutual funds and securities fees were offset by lower print and the card base as well as low covered services fees. Lower loss provisions decreased 24% or [ ARS 60.7 billion ] in the quarter, mainly reflecting lower commercial delinquency coverage at an adequate level. Personnel and administrative expenses increased ARS 26.6 billion led by personnel and market [indiscernible] is cost by an extra efficiency. The other major positive driver of the quarter was short in the net monetary position, the loss was ARS 102.1 billion smaller than the first quarter, reflecting the decline in quarter inflation. Finally, income tax and other items contributed ARS 7 billion to the quarter-on-quarter valuations. Lower other operating expenses more than offset the higher income tax rate registered in the quarter. On these factors explain the increase in reported ROE from 10% in the first quarter to 13.4% in the second quarter. Slide 8 shows the impact of the restructuring program on core profitability. Reported net income was ARS 206.8 billion during the quarter were ARS 14.2 million after tax restructuring charges, related mainly due to our internal plans that are in planning provisions. Excluding these charges, adjusted net income would have reached ARS 221 billion to plan and adjusted annualized ROE of 14.3% and adjusted ROA of 3.5%. These expenses are part of the efficiency program we have been implemented to create a more agile operating model and a lower short-term cost base. Moving to our second quarter 2026 as [indiscernible] performance. You can see the evolution of our balance sheet mix and pricing above assets [indiscernible]. On the assets side, those increased 3% at quarter end and represents 45% of the our assets, while government securities make up 25% of our assets. Asset [indiscernible] 280 basis points quarter-on-quarter from 44% -- 41% in the second quarter, reflecting our 327 basis points decline in [indiscernible] rate, while the average loans decreased 3%. On the liability side, costs continue to represent [ 76% ] of total assets, total reached ARS 14.7 trillion, down 1% quarter-on-quarter and up 4% year-on-year. Funding costs declined 560 basis points quarter-on-quarter from 24% to 19% due to 310 basis points decline in the average rate paid on costs, while the average volume costs decreased 3%. Funding costs declined faster than the asset yield traded by lower private sector peso deposit brands. Turning to Slide 10. The gross credit portfolio shown on the left, we've seen growth until [ ARS 12.6 trillion ], [indiscernible] from 3% quarter-on-quarter. [indiscernible] was the main driver of the increase, while consumer lending grew more [indiscernible] 100% to [ 30% ] of the gross portfolio at quarter end compared with 29% for commercial malls. Loans and other financing reached ARS 11.7 trillion with private sector financing up 3% over-quarter, including 2% growth in peso lending and 1% growth in U.S. dollar line, while our private sector loan market share remained stable at 8.2%. On right hand side, net interest income reached ARS 1.3 trillion, stable compared with the first quarter and [ 11% ] above the second quarter of last year. Net interest margin, including FX, declined from 25% to 24%, mainly due to a lower FX contribution. Excluding Net interest margin increased 30 basis points from 23.8% in the first quarter to 23.5% in the second quarter. Moving on to asset quality, the left hand chart shows our reported NPL ratio, increasing from 5.4% in the first quarter of 2026 6.5% in the second quarter. As we explained last quarter, the reported NPR basis affected by mandatory casting with [indiscernible] that take into account customers we have across the financial system. Our Stage 3 announced ratio increased 30 basis points from 3.8% to 4.1%. Our coverage ratio stood at 95.4%, this remained above the 86.3% level from system as of May 2026. It is important to mention that a Stage 3 levels reached 148.8% in the second quarter. The right hand side chart shows a different trend by segments. Commercial NPLs improved 0.9% from 1.3% in the first quarter and remain well below the [indiscernible] averaged 3.5%. Consumers [indiscernible] increased to 8.4% from 6.9% last quarter, but also remained below the 12.8% reporting from systems. Turning to the efficiency. Operating expenses shown on the left, reached [ ARS 450 billion ] in the second quarter, employee benefits increased quarter-on-quarter and then interest expenses increased 8%. As our [indiscernible] increased from 30% to 34%. The chart on the right shows the consistent lining of our operating model. We ended the quarter with 402 branches, 82 are in March and 89 fewer than 1 year ago. Headcount [indiscernible] to 85 to 180 employees, down 1% quarter-on-quarter and 8% year-on-year. These actions are part of the reserving program with the objective of increasing efficiency and agility by [indiscernible] net service capabilities of our franchise. Slide 13 shows the capital and liquidity and remain key strength. On the left, our Tier 1 capital ratio stood at 28% compared with an 11.5% regular requirement. On the right [indiscernible] increased to 79%, while liquid assets remain increment to 74% for [indiscernible]. Our capital and liquidity positions, therefore, continue to provide significant capacity to support growth and elevate certain opportunities. Before opening the call for questions, I would like to spend a few minutes center transformation. So I will now let Juan Parma, our CEO, to comment on strategy.

Good morning, everyone. Pleased to be here with you. We're going to cover quickly a couple of slides of our trajectory to 2030, basically the execution of our strategic plan that we presented back in December last year. So as a recap, our purpose is to be the leading bank for a thriving Argentina recognized for excellence in customer service and value proposition with 4 strategic pillars and 4 enablers. The 4 strategic pillars are simplicity, which means providing customers with simple, intuitive and increasingly digital day-to-day effective experiences. So that takes us to the next phase, which is once customers find us simple to operate, they will give us our privacy. As we know, primary customers are 8 to 9x more profitable than non-primary ones. So it's critical to move to the second pillar, which is forming customers from non-primary to primary. The third one is development that has to do with helping and supporting our customers to develop into the future with wealth management, with long-term lending, with insurance to protect their wealth and their families and their lives. So we multiply the value of our customers with more cross-sell with future-looking value propositions. And finally, it has to do with how do we service our customers, which has to do with the application of data, technology, artificial intelligence in our distribution models while keeping the human as digital was human. And of course, enablers take data and AI our talent efficiency to fund our investment in strategic areas. We need to reduce our physical structure, our less value-adding expenses to fund our investment into the growth areas. And final risk management to make our results sustainably into the future. The good thing is that this is our first year of the execution of the 5-year plan. And it's under execution, we are moving ahead with the transformation of the bank following these 4 strategic pillars. For example, this is just example this is not taxable. It's just some examples of the things that the bank has deploy across the second quarter of the year with a pillar of simplicity, for example, we've also completed the deployment of the new retail banking app with unified onboarding, digital onboarding processes for retail customers. We've launched extended hours to operate during the weekend -- truly weekends for commercial customers and much more on primacy. We have launched a first mover loyalty program. We're the first bank using loyalty programs as the ones that airlines or some well-advanced fintechs and digital banks use globally. We are the first bank in Argentina to does. This will help -- this will create a platform for us to move upscale customers from non-primary to primary. We are moving also with a relationship pricing facility to be sure that we price each customer according to their profitability potential, their risk and their loyalty. We're moving ahead with one of the initiatives of the strategic plan that will help primacy with commercial customers, which is the launch of our acquiring platform. On development, many things here as well. our wealth management app is life. Insurance was an area that we had underdeveloped in the bank, and we have launched out insurance across the network, which will be a driver of future fee income growth. And we are preparing for the launch of Banco Macro or private bank proposition and hiring, but also preparing our in with a cutting-edge innovative wealth, private banking academy for our people. Finally, on Digital Plus June, another read-through of the quarter is that we launched the first conversational banking whatsapp channel in the industry. You can -- customers can -- or 6 million customers can operate with the bank intuitively using day-to-day language sending us our views, sending us images, sending us text in day-to-day language and our agent can respond no other bank is doing at this scale in Argentina. So this is also giving us a competitive differentiation using and making use of AI in banking in Argentina and Rio. We continue with the transformation of the physical network, reducing our number of branches, but also modernizing and investing in the in the wealth centers in the commercial centers in what we go hubs. So we are reducing square footage, we are reducing numbers of branches, but at the same time, investing in these customer service centers to service the segments that are most profitable for the bank. So this is basically what is going on. There's much more under execution. We expect to continue bringing into this calls quarter-by-quarter the progress that we are making on our way to 2030. Of course, there are some variables in the macroeconomic context and the political context that are not in our control. We will continue negating the situation in this pre-electoral year, but we remain confident of the future of Argentina, and that's why we will continue building -- doing our job in building the bank of the future for thriving Argentine. Thank you.

Thank you, Juan. This concludes our prepared remarks. At this time, we would like to take the questions you may have. Operator, please open line for Q&A.

[Operator Instructions] Our first question comes from Yuri Fernandes with JPMorgan.

I have a follow-up on asset quality, and thank you for the slide presenting some of the metrics. It is clear that was this more update, right, that drove some adjustments here. But still, there was an ongoing worsening and a drop on your coverage ratio, right? So if you can give us just some outlook on how do you see cost of risk? How do you see NPLs evolving for the second half? And regarding the coverage, if this would be like the minimum because I know macro still has a good level when we compare to some peers. But the delta narrow now, right, this quarter. So if you can also give us a message regarding...

[indiscernible] of asset quality in across the board, second quarter for in the Argentine market was about art in terms of asset quality deterioration in NPLs. Basically, what we saw at some point is that the deterioration on the consumer portfolio continue maybe at maybe lower pace than one that we saw in the first quarter. There were some also pickup in the rhythm of deterioration on the company's portfolio. I could say that in terms of NPLs and we put that, it is very important to make the difference between our own risk customers and one on the contractor of our own customers with being not recurrent in other banks or digital wallets here. So this is very important to highlight there the difference between the [ 4.1 ] in our always and the [ 6.3 ] with the contacts status. Also, we obviously both looking at Stage 3, the coverage ratio is almost 149%. That is something that we are cost looking and it, of course, is well, well looking very healthy. In terms of the 95.4% that is coming down from the 109.8% in total coverage compared to the peak quarter. That is something that we were questioning because we were kind of the only bank being above the 100% level before the rest of the system was going downwards. So we did the same, but always keeping an eye on the Stage 3 coverage ratio that is very important for us. So that being said, I would say that for the end of the year, we think that cost of risk that was down in this quarter compared to the previous one. We are thinking to be between 6.5% and 7% cost of risk by the end of '26 and NPLs to be ranging between 5.5% and 6%. Those are -- in terms of NPLs, about talking about the total of not step 3. Step 3, of course, we are looking to be below 4% by far by the end of '26. And in terms of coverage ratio, Yuri, again, we -- for the moment, we are not seeing the total coverage ratio below 90%. We have to see what's going on in the industry going forward, but that is something that we -- that number we have with us, not [indiscernible], but the kind of a target. But of course, the important one is the stage 3 that for sure is going to continue well above the 100% level by the end of the year.

Super clear, Jorge. And if I may, a second one, just on growth, I think last week, there was a measure to flexibilize a little bit again the dollar lending, right? I think there is a cap on 15% of your deposits. I know, Macro, you were already landing in dollars with your own resources. How you see this measure, Jorge? And also the low outlook, like should we see an acceleration from here? How are you seeing overall? I guess your your former guidance of 15% to 20% on real growth may be a little bit challenging. So I don't know if you have this new measure, maybe we can see better dynamism for growth in Argentina.

Yes, what we are seeing is something that is related to what Juan Parma commented before, we are starting the beginning of the pre later year. And of course, this government has been very precise and making a lot of follows on maintaining inflation under control. What we are seeing that is have an impact on what we are seeing nowadays in the domestic interest rates that have increased a little bit compared to what happened in the second quarter. So that's why our forecast for loan growth is being reduced to level off around 5% in real terms and maybe slightly downwards. So this make a range between 2% and 5% increased terms for the whole portfolio. Here, we are assuming that the peso loans will grow until the end of the year in a similar rate than the monthly [indiscernible] figure. In terms of the dollar-denominated loss, we are also assuming that they will grow at a 2%, 2.5% a month. And also, we are assuming that's going to be a slight devaluation of the peso between June and December of around 12% to 13%. So if you do the math there, you can get to the level of between 2% and 5% real terms that we are talking to. In relation to the new regulation, you mentioned that the several bank announced where banks cannot lend up to 15% of domestic -- sorry, dollar deposits to those companies that are not generating U.S. dollars. We think that, that is something that will bring some growth for the portfolio. For the moment, we are not expecting that above or a huge increase in the near term, but this is something that maybe could have more impact in 2027, but we see this measure as a positive for the system and of course, for the currency.

Our next question comes from Julia Nohara with Goldman Sachs.

And I just have 2 follow-ups. I think one is on your asset quality. I just I was wondering if you could share some more color on how your write-offs in your recovery trends are going and how you expect it to trend going forward? And the second one is on loan growth. Next year, you have an election year. And I think loan growth this year should be a little bit more muted than we expected. So how do you think -- and if you could share already some broad expectations for loan growth next year would be super great.

Juliana, in terms of your first question, write-off policy is when the debtor decline reached Category 5 and it's provision 100%. We do a write-off there. That is something that we have been carried out response for many years, and we continue with the same one that is going to be the policy going forward. In terms of recoveries for the moment, we are seeing some little recoveries on the loans that have been write off or written off, sorry, we think that recoveries are going to be slightly bigger in 2027 when we think that the cycle is going to enter into a more positive trend. In terms of your second question, honestly, I think it's a bit early to make a guidance or loan growth for 2027. Honestly, we would like to see how we finish 2026, but also the macroeconomic variables in 2027. For the moment, we are having very preliminary guidance from the economies that we work with. So that'll give you at least one more quarter to give the 2027 guidance for loans.

Our next question comes from Ernesto Gabilondo with Bank of America.

My first question will be on the political side. We have started to see some kind of service or initial pulls ahead of the presidential election. I think it's too soon, but we are starting to see them. So can you provide us what are you seeing on your side? How is the business sentiment? How is the consumer confidence ahead of the election? And for my second question is on your earnings expectations and ROE evolution throughout the rest of the year. Your recurring ROE, adjusted is already at the double digit. So how should we think about the evolution of this ROE that in the second quarter, the adjusted one was at 14%. How should we think for the second half and for the full year?

Maybe I can take the first question on the political side. As you can imagine, we try to avoid making forward-looking statements predictions in terms of politics. Having said that, it is clear, as Jorge mentioned, that this is a pre-electoral year, and that as the election year approaches. And unless there is a super clear winner coming through the falls that creates a bit more chances of volatility. The government has been -- the Central Bank has been preparing for that from a fiscal standpoint from an FX standpoint from an FX reserve standpoint, which I think is welcome, preparing for what will likely happen, which is that we will see some more volatility. However, I must say that comparing this pre-electoral year with other pre-elections in the past, the good sign is that U.S. dollar deposits remain at record highs, which is a good sense of confidence from the public. But it's what it is. It's a pre-let earlier, and we will have some more volatility as usual. But again, that said, we believe that the government is preparing well for that and much better than in previous years.

Thanks, Juan. In terms of ROE, yes, we are increasing our ROE for 2026, the previous level for the adjusted ROE was in the area of 8%. Now we are moving up these guns to the area of 12% for the average for 2026. Basically, there was a good first half. In terms of margins, margins remain much better than expected. We believe that going forward, it will maintain this trend. So that's where we are increasing the ROE or the adjusted ROE target from 8% to area of 12%.

Our next question comes from Brian Flores with Citi.

I wanted to ask you two things. The first one is looking at your 2030 strategic plan. I just wanted to check, which levers should drive the ROE to your midterm targets? And first, obviously, if you can disclose it, where do you see the bank in terms of real ROE? And then what could drive it? I'm asking this because, as Jorge was mentioning, it seems that I should structurally come down, right, maybe to be compensated with higher volumes. And you're running at an efficiency ratio that seems historically good for you. But also you will need to be investing into this new, I would say, customer acquisition strategies, right? So just wanted to check in your view, what levels of ROE are you looking in a sustainable basis? And then what are the key levers that will get you there? And then my second question is more of a sentiment one and maybe this is something that we on the sales side, we are scratching our heads with and maybe you -- obviously, you can help us here, maybe we can scratch our heads together. But we're wondering here you're revising upwards ROE. And I think the industry as a whole is turning around in terms of unit economics. However, valuation seems to be coming down in a very, I would say, a sharp way, right? So clearly, the market is worried about something. I just wanted to check with you, in your view, if it could be the level of growth as you were mentioning in your own guidance is coming down and maybe the perspectives have shifted. Or do you think maybe on the political side, as Ernesto was saying in terms of big uncertainties in 2027 and forward, right? I know it's a tough question, but any insights here, I think it's great.

Let's start with the last part -- the last question in terms of the ROE and valuations. Of course, our view from a corporate perspective, we are increasing ROE from the 8% adjusted level that we mentioned before to the area of 12%. And it's pretty clear that the first half was much better than what we had expected, and we think that the trend at some point will be maintained in the coming 2 quarters. I agree with you that valuation of stock prices not only for the big sector, but for the whole Argentiniers are down when you look at on a year-to-date basis. And I think that, that is basically off of some point not only let's say, local risk. But at some point, I think that the international scenario is becoming a bit more scary, let's put it in that way. When you look at U.S. 10-year or 30-year interest rates, they are up. When you look at the U.S. financial -- fiscal deficit, this is huge. The amount of the debt is very high. So at some point, I think that investors are trying to move into a more safety assets, you are seeing now the gold prices are going up. So I think at some point, it's not only local, but I think that the world markets are a bit volatile and trying to find the best place to allocate assets. It's related to that according to our view. In terms of the first part of your question, in terms of your 2030 strategy, we'll let Juan to comment on that.

Yes, sure. I would add to the previous comments that come on valuations that adding to the global terminal. It's also the fact, as we mentioned before, that we are [indiscernible] a pre electoral year. So part of what you're seeing in the valuations, not only of banks, but in general, Argentina assets has to do with that. So we don't see as a long-term concern, but something that should be cleared out once we pass next year elections and political outlook becomes more clear for the next 4-year term. In terms of the levers to achieve long-term ROE, you're right. If we believe that the central scenario is one where Argentina continues its stabilization process and inflation continues going down and rates continue going down. There will be a trade-off with on one hand, margins continue compressing. And on the other hand, the financial system expanding where volumes should long term, more than compensate for the reduction in margins. But short term, is the opposite typically margins compress before the volume comes. So that's the transition that we see for the next 5 years in Argentina in this central scenario. Margins compressing as inflation rates go down and volumes as we harvest the opportunity of moving loans to GDP, which today stand at 11% to regional averages of 30%, 40%, 50%, that's the macro complex for the industry. In our case, the levers are capturing that growth and above. So growing market share, growing volumes, growing scale, but also moving harvesting that from not only acquiring new customers, but also moving primary customers up to day primary customers of 30%. We expect to end our strategic planning period with 50%, and that's a significant driver of profitability, efficiency and market share. The other lever is fee income, which is really important. And as Argentina starts reducing poverty and increasing its middle class and it's upper class, capturing fee revenue from insurance, from wealth management will be crucial and that's not subject to margin compression. And that's why you saw us talking about development of our insurance, about management of our product banking and everything that we are planting to be prepared to live in harvesting that opportunity. A third lever is efficiency. You mentioned how we will fund our investments in these growth areas while maintaining our efficiency. Well, the good news is that we still have a big physical network. We still have opportunities to recycle costs from nonproductive costs to more value-adding investments. And that's what we've been doing. This is not just the plan. This is real. As Jorge mentioned, we've been reducing significantly our benches network and our FTE and that's what we're using to fund growth initiatives while keeping our efficiency ratio in good levels.

Super clear, Jorge, Juan. If I may, just a follow-up on the level that you envisioned in 2030 as the sustainable levels of ROE? Do you have a specific target in mind?

Yes. I mean, going forward, and of course, sustainable implies, I mean, with Argentina range inflation is going to single digits at some point, if we continue like this, we assume that in 2028, Argentina will leave aside the inflation accounting. So they are reported in 2030, should be nominal. So we are expecting to be in the area of about 20% ROE by 2030.

Our next question comes from Pedro Leduc with Itau.

Can we explore a little bit more that part? I know it will come out to efficiency, but you've been doing a lot of changes in the footprint but also modernizing the tech and consumer-facing stack. And I'm trying to square it out when I'm modeling it forward as well. thinking less about efficiency because top line move a lot, but more on -- maybe on real terms, just to see where you are with the balance of savings and investments that you're doing?

Pedro, yes, by the end of the year, we should be in the area of [indiscernible]. At the same time, of course, as Juan was also commenting, we are investing in technology, in different sections of banking in order to modernize systems on so on. So I would say that going forward, we are going to see maybe nominally speaking, maybe similar levels of expenses. In the middle, you will have, of course, a decline in remunerations of employees because we are going to have less employees, we are going to see increasing in software expenses. But of course, going forward, the idea is to dilute this nominal level of expenses within a higher volume of net interest and fee income. So the idea going forward is to work there in both sides of the equation, expenses and the duration of interest and fee income.

Our next question comes from Marvis Taylor with Itau.

Just one question on margins. We saw this quarter, what we saw is that fund income actually went down, but all of that was offset by lower asset deals. So -- and what we've seen at the beginning of the third quarter, is that a little bit more volatility in the local rates. So I was wondering, I mean, the evolution of the margins for the rest of the year can be a little bit more challenging given that, that cost of fund can be kind of like reverse at the same time that as on having the pressure that we saw in the second quarter. So what's the band here for the evolution of margin for the [indiscernible] the remainder of the year and for the -- and with the guidance for that matter.

Mario, I commented this before. I think that the margins -- the net interest margin that we saw in the first half of the year were slightly wider than the one that we had expected. We believe that going forward, this level of margins would be maintained. I mean, at the beginning of the year, we were expecting to have net interest margin in the area of 20% as a guidance. Now what the first half, and we have to say that we should be above the 20% net interest margin in guidance. So the idea is to relatively maintain the margins in the couple of the next quarters.

Okay. That's perfect. And just to confirm what you mentioned about loan growth. The guidance, it was -- I believe, it was between 15% and 20%. You maintain that guidance? Or...

Mario, I mean -- that guidance was 2 quarters ago. Now the new one is between 2% and 5% in real terms, and I explained the evolution of the peso and dollar loans before.

Our next question comes from Camila Azevedo with UBS.

I have 2 questions from my end, 2 follow-ups. So first on growth, I just wanted to add your sense on recent performance of the last month and August -- starting August. And also, sorry, in the second quarter by economic sector or customer segments? And which would be the main drivers behind growth that you are mainly expected by sector as well? And also, how are you seeing retail demand currently. So in terms of demand, I just wanted Yes. That's another follow-up in terms of -- we are seeing higher spreads, right? So given these higher spreads, how are you seeing demand? And how should we expect demand to evolve in the second half of this year?

Thanks, Camila. In terms of growth, what we are seeing will be seen in the 2 coming quarters. in commercial lending should be outpacing consumer lending. At some point, the consumer growth is slightly below inflation and commercial lending is global inflation levels, monthly speaking. And we expect that this will continue at least in the next 2 quarters. I mean, the sectors, what we we're seeing demand are the ones that are the weakness within this economic model, which are basically mining, oil gas our business. We expect to see some pickup maybe in construction in the next couple of quarters. And we assume that massive consumption sectors, automobile are kind of users within this economic models, on we are not seeing big demand coming from that. So that is the idea within your high end of the margins. I think that's something to keep an eye on also is that when you look at the net interest margin, we are including interest rates there, but also income coming from the bond portfolio and on FX. So at some point, if you want to dig in that number, you we'll see at some point that intermediation rates should narrow a little bit. On the other hand, you will have income from bond and on FX, compensating the decline on the intermediation spread. So that's why we are forecasting some stability in the net interest margin.